Ex-Samsung Exec Attempts to Clone Entire Semiconductor Plant in China

A former senior executive of Samsung Electronics, referred to as Mr. A, has been arrested and will stand trial for his attempt to copy Samsung Electronics' semiconductor plant in its entirety in China.

The Defense Industry and Industrial Technology Crime Investigation Division of the Suwon District Prosecutor's Office charged the 65-year-old ex-executive, referred to as Mr. A, with violating the Industrial Technology Protection Act and the Unfair Competition Prevention Act on June 12. In addition, Mr. A’s five employees at the Chinese semiconductor manufacturer he founded, and an employee of a Samsung Electronics subcontractor who smuggled out the blueprints, were also indicted without detention on the same charges.

Mr. A is accused of unlawfully acquiring and using Samsung Electronics' trade secrets, including the Basic Engineering Data (BED) of the semiconductor plant, the process layout, and design drawings, from August 2018 to 2019.

Semiconductor plant BED is a technology that creates an optimal environment without impurities in the space where semiconductor manufacturing takes place. The process layout is a drawing with information on the arrangement and area of the eight core processes for semiconductor production. These technologies are semiconductor process technologies for manufacturing DRAM and NAND flash under 30 nanometers, which are classified as national core technologies.

Investigations revealed that Mr. A had attempted to build another semiconductor plant as a replica of Samsung Electronics’ semiconductor plant. It was even located just 1.5 km away from Samsung’s real plant in Xi'an, China.

Fortunately, the plant did not actually get built as an electronics manufacturer in Taiwan failed to deliver on its promised investment of 8 trillion won (US$6.2 billion) to Mr. A. However, it has been reported that Mr. A received an investment of 460 billion won (US$358 million) from Chengdu, China, and completed the R&D facility of the semiconductor manufacturing plant last year. He is known to have produced semiconductor prototype products that use Samsung Electronics’ semiconductor technology.

Mr. A, a respected authority in the domestic semiconductor manufacturing field who had worked at Samsung Electronics and been a vice president of SK hynix, is known to have employed about 200 staff from both Samsung Electronics and SK hynix in China. Mr. A reportedly instructed his employees to acquire and utilize Samsung Electronics’ semiconductor design data and the employees committed the crime following his instructions.

The prosecutors estimated that Samsung Electronics suffered a minimum of 300 billion won (US$234 million) in damages due to this technology leakage. A prosecution official said, “We have cracked down on the attempt to replicate the entire semiconductor plant, not just the leakage of semiconductor technology,” and also said, “It is a serious crime that shakes the foundation of the domestic semiconductor industry in a time when the competition for semiconductor production is fierce.”